US dollar looking for support at ¥110
The US dollar has pulled back a bit against the Japanese yen during trading on Wednesday, looking to the ¥110 level for support. That’s an area that was resistance in the past, so it should in theory at least be a supportive level going forward. I think that if the market can bounce from here, it’s likely to continue to see a push towards the ¥110.50 level in the short term, and then ultimately my target of ¥112.50 during the summer. I think that the market will continue to pay attention to the treasury markets overall, and if they show higher yields, that is reason enough for this market to continue the upside. I believe that there is a bit of support extending down to the ¥109 level, so it’s likely that we will see a bit of a “zone” of support. I don’t think that the ¥110 level is a “hard line in the sand”, so to speak.
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Ultimately, I believe that the US dollar is going to have a strong summer, and that of course will reflect in this market as well as many of the other currencies. The session on Wednesday has seen a little bit of softening in the greenback, but when looked at through the prism of the last several days, it is simply just a small pullback. I believe that ultimately we will continue to see buyers jump in and look for those higher yields in America as the Bank of Japan is nowhere near leaving quantitative easing.